Aviation emission allowances: prepared for take-off

Carbon is well and truly back on the agenda for the aviation sector in 2015. Airlines should prepare for the risk that the price of emission allowances could lift significantly in coming years, argue Louis Redshaw and Julien Dufour. [...]

Environmental Finance

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Carbon is back on the agenda for the aviation sector in 2015. But while the governing legislation may have settled down aircraft operators must prepare for the risk that the price of emission allowances could take off in the coming years, argue Louis Redshaw and Julien Dufour.

In Europe, after a 2-year absence, aircraft operators need to re-establish their carbon emissions verification and trading activities. The market for carbon has also moved on, the low prices of the last 2 years can no longer be taken for granted. Meanwhile, on the international stage, ICAO must come up with a global mechanism to cover aviation emissions by 2016 otherwise the industry may be left behind by the USA and China who, jointly, recently announced targets and cooperation agreements to tackle climate change. It is unlikely that these two super-powers will allow aviation emissions to go on unabated. We summarise both legislative and market developments and explore how these will impact aircraft operators’ costs in the coming years. [...]

Redshaw Advisors

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